Facebook Bought Instagram For 23M Shares + $300M Cash

Facebook Inc. paid $300 million in cash and 23 million shares worth of stock for photo-sharing service Instagram Inc., the social-networking giant said in a securities filing Monday.

After a weekend of negotiations between the two companies’ young CEOs in early April, Facebook agreed to pay about $1 billion for Instagram. Monday’s disclosure indicated that stock accounted for about 70% of the purchase price and that the shares were valued at roughly $30 apiece.

Facebook said in the filing that it determined the fair value of its Class B stock was $30.89 a share as of Jan. 31.

The new prospectus shed more light on the Instagram deal, Facebook’s biggest ever acquisition. Facebook said it would use Instagram — which lets smartphone owners take, edit and share photos with friends — to boost its presence on mobile devices, something it said “is critical to maintaining user growth and engagement over the long term.”

Facebook also said it will pay Instagram a $200 million fee if the government blocks the acquisition.

In the same filing, the company said its first-quarter earnings slipped 12%, as surging expenses more than offset a jump in revenue.

Facebook reported a profit of $205 million, down from $233 million a year earlier. Revenue jumped 45% to $1.06 billion, as total costs and expenses nearly doubled to $677 million.